M&S admits Castle Donington DC ‘struggling with peaks’

23 May 2018

Marks and Spencer has expressed frustration at inefficiencies at its Castle Donington fulfilment centre and disappointment with the rate of growth in its online sales.

The company’s full-year report read: “Although our online sales are growing, our online capability is behind the best of our competitors. Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated.”

The retailer said it was ‘investing to increase and improve eCommerce capacity’, including at Castle Donington in order to support its ambition to double the online share of its Clothing & Home sales to over 33%. M&S is also building a new retail distribution centre at Welham Green. ‘Teams have been established to address the supply chain issues in both main businesses, to deliver a faster, lower cost network’, the company said.

M&S acknowledged its supply chains in both Clothing & Home and in Food require significant upgrades, so it can be faster to market, reduce high stock levels in clothing, and improve availability and waste in food.

Marks and Spencer is pushing ahead aggressively in its shift to online, as outlined in its full year results to 31 March 2018, in which it recorded a 62% drop in pre-tax profits.

The report added: “The continued migration of clothing and home online, the development of global competition, the growth of home delivery in food and the march of the discounters all amount to threats to our business and market position. These, together with a challenging UK consumer market, mean that we have to modernise our business to ensure we are competitive and reignite our culture. Accelerated change is the only option.”

Over 100 M&S stores will close in total by 2022 as part of the radical pivot to online.

This includes 21 that have already closed and the 14 stores announced yesterday as proposed for closure or set to close.

Steve Rowe, Marks & Spencer CEO said: “At our half year results in November I outlined the need for accelerated change at M&S. The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short term costs which are reflected in today’s results.

“There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business. This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years.”